HMRC announced yesterday that the penalty for disclosures under the New Disclosure Opportunity (NDO) to be launched this autumn will be set at 10%. It is clear that the penalty has been set at a level to encourage taxpayers to come forward who have a disclosure to make. It should be noted that for any individuals with accounts at HSBC, HBOS, Lloyds, RBS or Barclays, who were offered the chance to make a disclosure under the 2007 Offshore Disclosure Facility (ODF), the 10% rate will not apply. A penalty has yet to be announced for these disclosures but it is anticipated that will be lower than those which would be charged under the new penalty regime (see below). Given the low level of penalty set just for the NDO, it should not be forgotten that the opportunity applies to all disclosures and not those relating to offshore accounts. Taxpayers who have a disclosure to make could see penalties significantly lower than those which they would otherwise face. Taxpayers who don't make use of the NDO could, if subsequently investigated by HMRC, find themselves in the new penalty regime. The new penalty regime applies to return periods beginning on or after 1 April 2008 with a filing date on or after 1 April 2009. Under this new regime taxpayers who have deliberately concealed omitted business takings or income (either through the use of offshore accounts or other methods) are likely to face a penalty of between 50% and 100%. In this context the 10% flat rate penalty under the NDO clearly provides a significant incentive for taxpayers to make a disclosure. To benefit from the 10% rate it is important that a full disclosure is made. If any additional liabilities are identified during any subsequent investigation or enquiry into the disclosure, taxpayers are unlikely to benefit from this lower rate. If you have any questions in relation to this newsflash, PwC tax investigations specialists have the expertise and experience to help provide guidance and manage any disclosures needed in such situations. For further information, please contact: Anthony Connelly | anthony.connelly@uk.pwc.com | Tel: 0771 8778710 Our tax investigations e-newsflashes bring key developments to your attention as they happen. If you would like to discuss anything covered by this newsflash or any tax investigation issue please call our 24 hour helpline on 0800 328 8215 or email tax.investigations@uk.pwc.com. Visit our website: www.tax-investigations.com.
Tax Investigations Newsflash
New Disclosure Opportunity Penalty to be set at 10%
Thursday, 4 June 2009
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